Global Trade This Week – Episode 117
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Keenan Brugh 0:00
You're watching Global Trade This Week with Pete Mento and Doug Draper.
Pete Mento 0:08
Oh, man, it's Monday. It's Monday at one o'clock Eastern. What's that mean? So it's 11 o'clock Mountain Time by Pete mento. And that's Doug Draper. So you know what it means? Yes. We'll trade this week. How's it going, Doug?
Doug Draper 0:22
Good. We're gonna rock it fire this one. This episode because I'm a little fired up. Right. variety of reasons. But there may be some of this. There may be some of that. And
Pete Mento 0:34
we got to shore it. Up, Troy's even mad Oh, man.
Doug Draper 0:40
So yes, yes, we were. Good. Good weekend. Good travels last week for you.
Pete Mento 0:46
Yeah, it was in Portland, Oregon in San Diego. I got home late Saturday night, and I'm leaving for Dallas today. So I'll be down in our regional headquarters, which they call big Tex. I mean, it's gigantic. But I don't know him. But big Tex kind of annoys me as a Texan. It's very friendly.
Doug Draper 1:06
Yeah, yeah. Yeah, well, I just get into it. I can't. I'm so fired up.
Pete Mento 1:15
We're gonna we're gonna tag team the first. The first topic.
Doug Draper 1:18
Yeah, I think so. I'm gonna let you kick it off. Because my comments dovetail into yours when I saw your topics. I'm like, Yep, I can. I can get I get on board with that one. So you started off, and then I'll chime in as needed. And then we'll have each one of our own topics after halftime?
Pete Mento 1:37
Yeah, so I've been sitting through a lot of automation. I guess you call them with demos, right? Where someone sits me through and shows me their their AI automation and their machine learning tools that they're trying to sell the company I work for now. And first, I tell them, I have no authority, and I have no power. Why am I watching this? And then I end up sitting through it for 20 minutes anyway, because they're friends of mine. And then they talk to me about how this broker is using this tool and the see brokers using that tool. And Michael Great, that's I'm really happy for them. But again, I think we're good. And then you know, I start thinking about all this right? Like there's all this work that's being done by customs house brokers, where the the review and the input and a lot of the work that brokers would generally do is actually happening outside the country. There's a problem with that Doug, the problem is the new compliance rules on Customs House brokers require that anything that is customs work, well, it always was supposed to have it is done by customs house brokers. And what is customs work now it's not so broadly defined, three acutely defined. So this kind of work being done without supervisory control by an actual customs house broker in the United States, you're not gonna be able to do it anymore. So a lot of the smoke and mirrors Miri Miri, it's probably not a word smoke and mirrors stuff that's being done to cover up the inaccuracy of the data, the inaccuracy of the technology itself in places like the Philippines and India, at a lower cost in order to maintain its accuracy, it's going to be a problem dug. And if it's ever uncovered or discovered by the folks at CBP, they might have to shut it down. It's a broader problem, because across our entire industry, we're just using more and more and more automation. And I posted about this on LinkedIn today. There's this this great song by Sturgill Simpson, who I mean, then I'm actually and he's got a song that it kind of, quote, 17th century regression theory, right? You know, It's turtles all the way down the line. They're like, well, the earth is flat. So what does the Earth sit on? You know, well, you know, the Earth is on the back of a giant tortoise that goes around the sun. Okay, well, what's that tortoise on what's on another tortoise? What's that tortoise on what's on another tortoise? It's just turtles all the way down the line? Oh, I see. So what system is watching this system? Well, another system. And what AI is watching that one more AI? Well, somewhere down the line people have to be engaged in the government holds this person engaged for his license. So somewhere down the line, they're going to give someone a fine, and it won't be our two D two, or how 9000 It's going to be Pete mento, who loses his license over. So at what point are, first of all, what point is customers going to start calling these people on the carpet? And at what point our customer is going to start to get a little shaky about this technology? But
Doug Draper 4:44
yeah, I think the key thing there is when when it all goes automated, right? An AI gets involved. There is no room for human manipulation, right? Or if you don't have all the data elements inside, right. And so the best way to describe this, and I do not know any specific example that this is happening, but I know what's happening, right? Where you've been pushing the button on an entry for, for a customer you've been working with forever, it's a commodity, they may change it slightly, but you're just pushing the button to do the customs clearance. Well, AI, in some instances, is going to expose that you're not intentionally doing anything wrong. But for some reason, what you've been doing for the last seven years isn't 100%, right? Because you just have a relationship with this customer. And you have been doing the same thing you've done forever and custom sees it. And it just kind of goes along the way. You bring in some robots and automation, Pete, there's any little nuance of what's not happening correctly, will be exposed. And I think it's not ill will, I don't think people are trying to manipulate the systems as far as brokers, but there's gonna be lots of little nuances that are gonna pop up that, like you said, a human still has to be responsible for and they're gonna be like, Oh, my God. I'm not sure I wanted. You know, like you said, RTD to or how 9000 involved with this. So I think it's probably good in the long term, because it's going to clean things up. That's the whole point of a lot of automation is to streamline, and get humans out of it, because humans do make mistakes. But I think once things turn on, it's going to be a lot of little things are going to pop up and then people are going to hold on and say wait, wait, wait, wait, hold on a second. I wasn't intentionally trying to do this. And then we'll be it'll be interesting. The the piece I wanted to add on this Pete is more on the domestic side, related to automation that goes into the movement of the goods. And we've talked about this before, but it just got me fired up today, when I saw a guy driving a trucker cruising down the street when I was heading into work, is that I did some research. So according to ATA, American trucker Association, 96% 95.8% of every single truck you see on the road has 10 trucks or less, right, you see the logo trucks, FedEx, the Warner's, the Swift, the knights, all that kind of stuff. 96% are guys like you and me that are just trying to get the job done trying to navigate the insurance craziness that's popped up. Because of nuclear verdicts, you're trying to keep people interested in doing the job. And I'm just trying to put food on the table, or enough money in my back pocket. So I can retire and keep things moving forward. And now you want me to carry some device or download something on my, on my phone. So what the activity I'm doing is automatically updated into some systems. So you can show it, just call me, I don't have time for this, right? I'm trying to get through this gate to get my ocean container to get the hell out of there. So I don't have hours of service. And I'll get in a wreck with my insurance. And so until things are linear, I can't remember the term that we you know, the owning the rails and going vertical, which is not going to happen anytime soon, specifically with trucking in the United States, it's going to be real difficult to use automation to fix some of those problems. It may look that way to the user of that technology. But the reality is, there's still guys and gals in their early 20s trying to get in the industry that are just banging the phones trying to figure out where the stuff is, and how's it going to get there. And so, automation is good, but I think it could expose some unintended consequences with compliance. Not that anybody's trying to hide anything or do anything wrong, but it's going to come to the surface. And then until our industry is vertically integrated on on all levels, just overlaying some technology that you see in a 20 minute presentation, that it's not going to change. And it's not going to be vertically integrated for a very, very long time, specifically related to domestic trucking.
Pete Mento 9:02
There's two pieces of that that got my attention. The first is that that old trope, right garbage in, garbage out, you know, whatever, whatever junk goes in the system, it's gonna snowball on its way out. And when you have the systems that are automated from the point of, of export, or even pickup, by the time it gets to customs, I mean, imagine how many mistakes have been snowballed into mistakes that have been snowballed into mistakes, that if it's not being watched mean, we want to talk about just a catastrophic error on top of a catastrophic error. And that leads to this other side of it where if the user is lazy, or if the user doesn't want to do it, where's the enforcement? Who's it going to be enforced upon? And if you have a lot of small time operators who are just doing it out of spite? where's that going to put us? How accurate how useful is that information? Is that data actually going to be resilient? And is there any utility and gathering in the First place is what kind of pushback is going to take how long is going to take for that that data to be useful for people like us and for our customers and clients? I'm not sure the integrity is going to be there for quite some time, though.
Doug Draper 10:13
Yeah, it'll be interesting. And I think some of the unintended consequences, you know, we've talked, while everybody's talked about COVID, and the impact it's had on our industry, you know, the unintended consequences of COVID, that nobody ever thought that showing they're being present years after the pandemic is over that we're like, yeah, that's kind of because of COVID. Right? Why can't kids read anymore? And why do they have no attention span? And why is this a second grade kid that's never been in school in his life, it doesn't know how to write his own name. It like the unintended consequences of what's going to happen a couple years down the road is yet to be seen or defined.
Pete Mento 10:54
In your life, you're just starting with it now. Now, imagine what those unintended consequences of pure data integration are gonna look like. And then the unwinding of it, if we ever goes because right now, there's no connectivity between all these companies and all these systems. What happens if someday we come up with a way to have conductivity, you're going to have to unwind all this stuff. So that maybe it can work together, all that investment that companies are making? Well, now we have something new you have to invest in, if you want them all to talk together. Great. You know, it's like everything else, you know, you put millions of dollars into software integration, and you got to do it all over again. Yeah. I shouldn't complain, you know, there's a lot of money in our industry for it by worried about our clients and how they're going to put up with it and all the toughness it's going to take for them to have to deal with it in this
Doug Draper 11:42
environment. Yeah. Interesting. Well, you know, what people don't have to endure and deal with is a halftime that is boring, and not interesting. And that's where we are right now. Pete is going into halftime, right? That was a pretty piss poor transition that I tried to do my best. In the moment you love
Pete Mento 12:00
the transitions too much, you. I would love for a little challenge.
Doug Draper 12:06
That one was for us. And I apologize to you and our audience for that one. But we are here nonetheless. And it's brought to you by CAP logistics. Please check out cap logistics.com for transportation needs and services. They give us the platform. Speaking of platforms, Pete, lets you want to go first you want me to go first letter? Yeah,
Pete Mento 12:27
I think I've spoken on the the show before that. I like to listen to music when I work. And a lot of the times when I listen to music when I work, I will pick musical genres and artists where I do not understand the language if I told you that before that. No, not at all. Yeah, yeah. So in order for me not to be distracted. While I am working, I will listen to Palestinian hip hop, or one of my personal favorites right now is Samoan death metal, is a great band called shepherd's rain. Also New Zealand death metal, alien, alien weaponry, I think is what it's called. I have no idea what these people are saying. Absolutely none. So when I'm working, the lyrics really don't distract me. Now after a while, if I listened to it, I start saying the words in my head even though I have no idea what they mean. But I also listen to a lot of jazz. When I work in classical music, and my daughter, when I listen to jazz, will say to me, that's old person music. And this has been this has been supported by a lot of people recently dug that listening to jazz is a great, it's a great indicator that you are a boring old fart that you're probably also a little stuck up and snobby. And it's kind of bugging me, Doug. So just wanted your opinion, jazz? Is it for old boring men? And are you a jazz guy?
Doug Draper 14:08
I'd say no, for old boring man. Am I a jazz guy? Probably not. But I have to tell you that. Probably like in my late 20s. I'd be the jazz guy. And I think it was more just trying to pretend to be older than I was because it was just after I bought my first house. And I'm sitting there on Sunday morning and you're getting your coffee and actually would get a paper that you would touch and feel and I'd throw all the crap out and thin it down to maybe like four sections that really matter. And I would go on the porch. And I think David Sanborn was one of the guys that I listened to if you I don't know if that name rings a bell at all, he was a saxophone maybe. So I'd be on my porch with my paper and my coffee and it'd be eight or nine o'clock on a Sunday. And so I kind of got into it a little bit at that time. But yeah, I'm more into like New Zealand death metal now really kind of my thing. Smelling death
Pete Mento 15:08
metal. Should I send you some? Some shepherds rain? Yeah, that's great stuff.
Doug Draper 15:15
Yeah, yeah. Anyway, do you feel bad that made you? Does it make that let me let me rephrase that. Do you feel old and you're your daughter, you're validating your daughter statements.
Pete Mento 15:27
Not really. For me man like jazz is a New Orleans thing I really love going to the jazz place in New Orleans and sitting down, they always have like a two drink minimum. So once I'm there, definitely gonna get my money's worth. And I will have two or three cocktails, listen to some some jazz musicians and just relax. It's very, it's a good time, you know, turn my phone off and just listen to someone play some live music I really enjoy. Nice, very
Doug Draper 15:55
cool. All right, my my halftime Pete is a little bit out of character for me, because normally I may say, science and space nerds and stuff like that. But I think I am pretty stoked about this asteroid sample that just landed in the Great Salt Lake yesterday, or maybe it was Saturday, right? So eight ounces or nine ounces of rock and soil that was landed on this asteroid. The new I think the E nnu. And that's freaking amazing. Like, we landed on a rock, gathered some info and and, and it came back right. So here's the popular theory. This will help us determine that this is an asteroid crashed into the earth billions of years ago and had the fundamental ingredients to create life. Yeah, I could have told you that without getting 8.8 ounces of dirt and rock from an asteroid. Right, that's probably on a 30,000 foot level, probably pretty close to what happened. So I want to focus on the here and the now as far as how amazing it is that this thing happened. First of all, this spacecraft was in its mission for like seven years, right? It landed on a freaking asteroid, it took a sample, it brought it back. And then some other spacecraft dropped it from 63,000 miles. And it landed in an area that was designated that it was supposed to land. And that, to me, is freaking amazing. It's tangible. And it speaks to volumes of the technology and the advancement that we've come to as a society to do that kind of thing. Now, I could have told you the rocks gonna say that the earth is really old. And there's some collisions that happened that created life, right? I don't, I don't care about that. What impresses me is the technology that's here now that enabled that whole thing to transpire in the last seven years. So that's the call out from my halftime is the cool technology that's with us right now. Not what happened billions of years ago.
Pete Mento 18:07
Well, let's take it from the top. First of all, Doug, there was there was it was not an asteroid colliding with Earth. That form human being alien was aliens that came to Earth and embedded, whatever, you know, primordial soup was here with their genetics. And we we are, we are the basic, you know, evolution based on alien integration with our DNA. So we'll just start there. Alright. Second of all, we I'm convinced that we went and did all this to understand what it would take to destroy an asteroid on its way to the earth. Because in the past, the Earth was hit by an asteroid when a civilization was already here. And wiped out early or almost wiped out early humankind because I'm all about this ancient civilizations crapped up. Yeah, pretty sure I'm pretty sure one predated us. But you know, back to the original premise, I too, am humiliated intellectually, whenever I hear about stuff like this, like I'm the guy that's usually gonna take apart the Ikea furniture and put it back together again the right way once at least, when I realized I did something wrong with the instructions I'll tool on my jeep all day long. That's intuitive to me. But the idea of of a roomful of a lot of people probably spent most of their high school years probably being stuffed in lockers, sat down with some amazing computer power and did this like from concept to execution. And it worked. Yeah, that's pretty amazing.
Doug Draper 19:50
Yeah, pretty great. Love it. Love it. Well, obviously brought to you by CAP logistics. We do a front end. Thank you and an end to halftime. Thank you that way you have the Wilkins, but love cap, we wouldn't be here doing this without them. So thank you very much. All right, who I always would page two who's doing the second half year, your buddy. All right, so this is my take, we don't bring up the rail very much, right. So I don't think we've talked about rail and like the last two months. But I like rail, I love the industry, it's one of the key modes of moving product around not only the United States, but other parts of the world. I just think the rail industry is missing opportunities to highlight the benefits of moving goods in their system, right. I think years ago, CSX CSX had like a marketing pitch, where they said, you can move a ton of cargo 500 miles for like, one gallon of diesel. Right. And that was even before the whole carbon footprint and reduction and global warming really just started escalating. So my point is, is that that's a huge marketing opportunity, and facts that you can move a lot of cargo domestically in other parts of the world, by minimizing your carbon footprint, it's always been there, they've always done that they need to bring that more more to the attention. Now, they only generate like point 5% of the carbon emissions out there. But that's even bigger reason to raise your hand and say, Everybody come on board, because we don't impact the environment, you need to put more and more stuff on our trains and, and move things. So I think there's just I don't know they're missing it. The whole automated so that's one Pete The second one is the autonomous nature of our industry and how everybody wants to have autonomous trucks and autonomous cars. Well, when you look at a train, this is my personal perspective, as a person that's like, gosh, I don't know, if I want a robot driving a car or driving a truck down my highway, but a train, it's on fixed rails. And as it stands, right now, there's a handful of conductors that are moving hundreds of rail cars. So the concept of saying let's automate that whole thing. And it's more secure because it is on rails and in a fixed connection system versus drivers and cars zipping all around, you know, a highway like it's a gigantic fishbowl that I don't think that there's been enough research, I know there has been but the whole autonomous railcar thing, it is a huge opportunity to speak to, you know, carbon footprint and, and and taking things to the, to the next level with taking humans out of the process. And, you know, the whole idea of final mile that driver shortages and things of that nature, let the rail do the heavy lift from point A to point B and just let humans take care of the final mile stuff when they're in, in the cities. And so when I when I see news on rail, that that just isn't very exciting. It's just to me, it's disappointing that there's so much there that can benefit the industry, if it's properly message to the public, in all the things that our industry and people in general want to see from a transportation entity, reduce your footprint, make it safer, autonomous nature of the mode, it just, it's crazy, it reminds me a lot of USPS that just can't get their act together and and showcase and benefit, you know, the power and strength they have with their network. So anyway, I love the rail, I'm not bagging on the rail, I just think there's a lot more opportunity that people have, or a lot more opportunity that's there that nobody's talking about or marketing or really taking that mode of transportation to the next level as a viable option when we're all trying to figure it out. And, and save the planet and and reduce the footprint onto our, onto our beautiful earth. So anyway, there's my rant on the rail.
Pete Mento 24:08
You just couldn't help but get a dig in on my friends at the post office.
Doug Draper 24:11
That's exactly that's exactly why I put it in there. Just right there in the moment. I put it in
Pete Mento 24:18
couldn't help yourself. Yeah. Yeah, there's no question that adopting rail as a, as a primary means of moving containers across the country is not only better for the environment, it's also more efficient. It's it's a clear it's a clear bridge to autonomous movement. It is shocking how few people actually work on the physical side of the train piece but there are a lot of people in the yards in the sides but I mean that's that's entirely different. And the vast amount of cargo that moves on those trains and we kind of take it for granted. I mean, if you think if you think about it, man, how often do you what we do, I'm sure we think about it all the time. We see real cars we're like, oh, look, there goes. But what are often Americans do if you don't live in the middle of a country, you probably don't even see them all that much moving around, but they're that I don't know, the real statistics, but from what I understand they're generally pretty safe, reliably safe. We do have more derailments, and I think Americans realize, but they are generally safe compared to just mathematically the number of times that we had to have truck accidents or trucking or automotive accidents. How often does the derailment happen where we have catastrophic loss of cargo and human life? I'm, I'm still hung up on the whole infrastructure thing, man, we need more rails, we need more real heads, we need to be able to create in such a way that we can take better advantage of it. And that comes down to a real estate problem. And it's just really overcome.
Doug Draper 25:52
Yeah, yeah, I don't know. It's just surprising that that's it hasn't really gone, you know, the technology around parcel, the the the freight forwarding world that we spoke about two seconds ago, all the the trucking and thing it just It baffles me that it hasn't been brought to the forefront. I'm just reiterating my point. But there's something there that's not being taken advantage of that could benefit a lot of people in a lot of industries and a lot of individuals. I agree. I completely agree. Eyebrow, take us home.
Pete Mento 26:24
Yeah, sort of a, I guess I'd say almost almost fringy. I don't want to call it a conspiracy theory. Because there's, there's way too much academic rigor going into this way too much academic analysis and thought that's being put up against this. But there's a real question right now about whether or not the Chinese are being honest, regarding their population numbers, we've spoken about this on the show many times, the demographic curve for China is not good. It's not good for a lot of countries. But when you talk about a population, the size of China, that gets a lot of attention, by 2100, we expect that the population of China will be let at least less than 800 million, it's possible that it could be as low as 700. But it will certainly be below a billion. And that's based on estimates of a Chinese population that is hovering somewhere between 1.2 to 1.4 billion people. There is very credible evidence that the Chinese government, the CCP has been grossly over estimating population numbers for some time now. And there's two, there's two rails that come off of this. Now, the first would be what because of why, right. So the first would be because when you look at the ability to raise an army, and to be able to mobilize for military conflict, you look at the age of men that you can put under arms. So there is actually a bit of fakery that you can use to force other people to monetize their military industrial industrial complex. So there's that. The second one would be because it helps you to empower yourself financially in the eyes of the rest of the world, and to slow down any talk of a failing economy in order to prop up the investment into your economy. So 100 million people are believed maybe more as that number that has probably been overestimated for the population of China. And if that's the case, those numbers go down even more dramatically. As we've said, on the show, many, many times fertility rates are going down. The age of people having children is going up, the number of children all over the world that families have is going down the availability of women versus men who are interested in having a family in China is going down. It's just not a good. It's not a good pyramid, right. It's not supposed to go that way. And China has been notoriously bad at allowing the immigrants into its country. And so the likelihood of them being able to grow the population by adding in a fresh group of people that they want to bring into the great Chinese melting pot is outrageously low. This is bad news for an economy that's already under the microscope of global economic investment.
Doug Draper 29:26
Yeah, yeah. The One Thing Two things pop out to me on that one. It's kind of funny when everybody talks about the the earth and how the population is growing and the earth can't sustain the growth. There's not enough food. There's people we're gonna kill the earth and all that kind of stuff, right? And now here's a messaging and talking about, there's less people in the world and all of a sudden there's a panic, and it's a dire situation. So that's kind of a hard and maybe perspective that people feel like Draper's kind of an asshole. But everybody talks about, you know, how, how the population is going to destroy the earth. And then here's some statistics that say there's less people being born. And that's bad too. So I don't I don't know. That's,
Pete Mento 30:16
that was one of those times where people who only listened to us and don't watch us really missed out. Very true. Oh, go ahead.
Doug Draper 30:28
No, no, the the other thing is just, it's hard to know what's real and what isn't when it's self reported numbers, you know, and trying to develop strategy and positioning yourself from any country, whether it's the US or otherwise, on false, potentially, well manipulated and potentially false information can be kind of scary and detrimental. So I don't know if we're gonna get straight numbers on anything coming out of there that may put them at a position of weakness in the the global economy, world power, so forth. Is it just
Pete Mento 31:10
a sigh up, Doug, is it was a psyops it's a psychological operation, and they just mess him. Right. But the, the idea, you know that the population going down is going to solve all of our problems. The population might be going down, but our absolute, I mean, tireless consumption of crap. And our need to manufacture more of it is not ending we are, we just consume more and more, regardless of the number of people that we have, and our desire to continue to manufacture it and move it at great cost to the environment continues as well. I don't know how to explain it, you know that the numbers are incredible that we continue to increase imports, even in a down economy, and the production of goods all over the world, although it might be waning in one part of the world is increasing, and others and we're increasing the use of of, of every type of raw material in order to get there. And we're seeking those raw materials farther and farther away from the source of production. So it's just until people stop buying crap, they don't need, this problem is not going to go away. That's really the source of the issue is just the desire to consume. And you just got to stop buying a bunch of junk you don't even that's how you stop this problem. Nice.
Doug Draper 32:31
Well, that's a good way to end I have no transition. I'm not even going to attempt that. So we will just call it called a wrap. We'll wrap this thing up, call it another successful edition of global trade this week, comes to you every single week, hence the name in the title of our show. And cap logistics makes it all happen. So namaste out the cap, and I think that's it. So he will catch you next week. And that's it. Thanks, everybody, for listening. See you buddy. All right. Take care.
Transcribed by https://otter.ai